Thursday, December 28, 2006

Nationwide New Home Sales Up - Except in Florida

Commerce figures are out for new home construction sales in November. From the St. Pete Times:

'Maybe it was balmy weather up North, maybe it was lower interest rates, but the country as a whole experienced a mini spike in new home sales in November.

Pity poor Florida: The Sunshine State, and most of the South for that matter, didn't enjoy the rebound.

Nationally, new home sales in November rose 3.4 percent from the previous month to an annual rate of 1.047-million. That exceeded economists' forecasts of a 1.018-million homes.'

Sadly, prices have risen. Again.

'The national median new home price climbed to $251,700 in November 2006 from $237,900 in November 2005.'

Remember, the Commerce Department report does not take into account cancellations - so these numbers tend to be higher than actual.

And for the Tampa Bay region, some reports on the builders.

'Transeastern Homes: The builder of such best-selling neighborhoods as New Tampa's Live Oak Preserve has tried to stave off bankruptcy by laying off more than 100 and dismissing regional president Bob Krieff.

Ryland Homes: Heavily invested in Pasco County, Ryland's southeast division, which includes Florida, saw new home orders tank 64 percent from the third quarter of 2005 to the third quarter of 2006.

Centex Homes: Centex's sales this year have been leaden compared to 2005. In the Southeast region, the number of home contracts plunged 53 percent.

Beazer Homes: In the Atlanta builder's annual report in September, the company said new home orders dropped by a third in Florida. Its stronghold has been southeast Hillsborough County.

Pulte Homes: Based on its latest report, the nation's second-biggest homebuilder sold 29 percent fewer homes in the region that includes Florida. It has trimmed its work force 10 percent. Pulte is active in Clearwater, Seminole, Hudson and Wesley Chapel.'

Full Article

US Commerce Report - New Home Sales

Friday, December 22, 2006

Our Own Private Idaho

The US Census population growth figures for 2006 are out, and, as you can see, we're trading places with (of all places) Idaho in terms of population growth. (source, US Census Bureau - releases from 2002 to 2006)
(And in case you were wondering who the top 2 have been these past 5 years, in every year it's been Arizona and Nevada. Talk about wandering tribes in the desert!)

Note that these figures are from July to July, so the latter half of this year won't show up until the December 2007 release of data.

Though we've dropped to #9 in % ranking, we're still #2 in total population gained (2nd only to Texas), with 321,697 added. That comes to 881 people per day (and we all know that figure is dropping as we speak). So tell your local realtor to stop spouting off the "1,000 people a day" figure that's been quoted ad nauseum during the bubble.

The bottom line - for the first time in decades, we're almost assuredly dropping out of the top 10 next year. What a surprise.

Full Article from US Census Bureau

Oh, and if I don't get a chance to post before next Monday, have a wonderful Christmas Weekend!!!

- Jerry

Wednesday, December 20, 2006

Markets Heading for a Fall - Part Deux

From Yahoo! Finance, more dire predictions for homesellers in 2007.

'Although few experts predict that home values will fall dramatically in 2007, many economists say that prices won't improve for 12 to 18 months. And without the cushion of rising home equity -- which softened the blow of high oil prices last year and kept consumers buying big-ticket items at a rapid clip -- Americans may lose confidence in their finances, and the broader economy is likely to suffer.

Ambitious building booms in many markets in the past half-decade, combined with mortgage interest rates that have increased about 1 percent in the past year, have resulted in residential real estate stagnation. The gridlock defies conventional wisdom, stubbornly remaining neither a buyer's nor a seller's market.

"We are currently experiencing the worst of the market freeze, which is being exacerbated by the gap between the buyer's desire for bargains and the seller's fantasy of what they once thought their homes would be worth," said Diane Swonk, chief economist for Chicago-based Mesirow Financial, who forecasts a rebound in early 2008. "The good news is that there are some signs of stabilization. The bad news is that a substantial backlog of unsold homes still exists."'

Moody's makes an important observation - is this a portentous statistic?

'Global forces and U.S. monetary policies play important roles in the housing slowdown, which already appears to be depressing the national economy.

The newest forecast by Moody's, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent -- the first decline for an entire year in U.S. home prices since the Great Depression of the 1930s.'

Again, how did we end up in this mess? Quick answer: It's the interest rates, stupid!

'Peter Morici, business professor at the University of Maryland, said artificially low interest rates over the past half-decade encouraged China and other exporting nations to purchase 10-year bonds, which kept U.S. mortgage rates low and fueled the housing bubble -- despite a gaping trade deficit that should have sapped investor confidence years ago.

"In order to play this ponzi scheme, the value of the homes had to go up faster than the economy grew and faster than people could service their debt. We've reached that limit," Morci said. "The housing market sustained the economy at a time of very large trade deficits. It's been a false prosperity."'

And what do the forecasters say about our fine state?

'Florida will likely remain the toughest market for buyers and sellers.

Building frenzies in Miami, Orlando and the Caribbean coast resulted in a plethora of for-sale signs. Developers desperate to unload inventory offer free granite countertops, appliances and furniture -- even cars, vacations and mortgage payments for up to six months.

Meanwhile, insurance companies dramatically raised premiums after Hurricane Katrina. Depending on where they live and their policies, Florida home owners may pay as much as 10 times more for flood and wind insurance than last year; premiums can exceed $30,000 per year on mansions. That's caused monthly costs to skyrocket, pinching current owners and making it all but impossible for renters to buy.

Throughout Florida, 12,773 existing single-family homes were sold in October, down 22 percent from a year ago, according to the Florida Association of Realtors. Florida's median price was unchanged at $242,500, but more than half of the urban areas posted declines. Around Fort Myers, the median price plunged 44 percent to $249,200 from October 2005.'

And let us end with some serious b.s. from a man who obviously owns real estate that he can't unload. His data that he quotes is from pre-2005, and his statements are nothing but air-filled cheerleading. We will keep his statements here for posterity.

'Not everyone is pessimistic -- even in beleaguered Florida.

Long-term demographic shifts from the Midwest and New England bode well for the notoriously boom-and-bust state, said Dave Denslow, professor of economics at the University of Florida. Florida, which gained 430,000 new residents in the past year, is a popular destination for Latin American immigrants and retirees from northern states, Canada and western Europe.

"People start thinking about buying a retirement home in their late 50s, and baby boomers are approaching that age," Denslow said. "The demand for residential housing here is only going to get stronger through 2020."'

What a load of crap.

Tuesday, December 19, 2006

Markets Heading for a Fall

From CNN/Money, a forecast for the top 100 housing markets in the US for 2007. It should be no surprise to see that 2 of the top 10 forecasted declines are here in the Sunshine State.

'This time last year the big question was whether the real estate market was going to slow down. Today it's "How bad will it get?"

The numbers tell a confusing story. For existing homes, buyers are trickling back into the market - sales inched upward in October even as the median home price fell by 3.5 percent, the largest year-over-year drop on record. And that comes after price declines in August and September.'

And new homes....?

'On the new-home front, sales in October fell, but the median price crept upward. For homebuilders, cancellations are up and orders down. '

Mark Zandi, from, says it best.

'"It's possible that the broader housing market will firm in the next few months, that the worst is over," says Mark Zandi, chief economist at Moody's "But that to me is a dead-cat bounce." In a word, yikes.

So Fortune asked Zandi's group and real estate valuation company Fiserv Lending Solutions to give us their take on what lies ahead for housing in the country's 100 largest metropolitan areas. '

Full Article (with forecasts for all 100 markets)

Friday, December 15, 2006

Allstate Backing Off Request for Humongous Rate Increase

From the Southwest News-Press, some somewhat good news regarding the home insurance rate requests from Allstate.

'Allstate has had second thoughts about its next round of rate hikes.

The state's second-largest private property insurer this week has amended rate filings with the Office of Insurance Regulation to lower the amount of the average premium increases it seeks to 8 percent for Allstate Floridian and nearly 9 percent for Allstate Floridian Indemnity.

It originally sought to raise rates an average of 22.5 percent for Allstate Floridian and 33.2 percent for Allstate Floridian Indemnity — though residents in more than half the company's territories would have seen increases over 70 percent. How the new rate hike breaks down for individual homeowners is not yet available.

Allstate has been negotiating with state regulators over the pending rate hike since September. Chief among the many faults regulators found with the rate hikes was a $259 million charge for reinsurance. Allstate actuaries admitted the company did not buy all of that, but wanted to be compensated as if it did.

Meanwhile, Southern Oak Insurance has filed for an average rate hike of 30.2 percent for home coverage. The Office of Insurance Regulation has set a public hearing on the request for 10 a.m. Friday in Tallahassee.

And if you are with a private insurer, don't forget your little "surchage" to help shore up the largest welfare home insurance program in the United States, our very own Citizen's Insurance.

Thursday, December 14, 2006

St. Lucie Foreclosures Up - Way Up

From today's Palm Beach Post. Interestingly, the article starts off with better news in Palm Beach County, but then jumps right in with St. Lucie's numbers.

'Palm Beach County saw a dip in foreclosures in November, while at the same time, St. Lucie County saw its troubled real estate more than triple.

Analysts are blaming rampant speculation in St. Lucie's new-home market and exorbitant hikes in homeowners' insurance as the cause of its leap to 313 foreclosures from just 94 in November 2005.

The increase is the highest foreclosure level for the high-growth area in nearly two years, according to a new report from RealtyTrac, which documents foreclosures nationwide.

"Tons of new homes have been built in St. Lucie County in the past couple of years, and a big chunk of those were snapped up by speculators," said Mike Larson, an analyst with Weiss Research in Jupiter. "Now, some are finding they can't rent them out for enough to cover their mortgages. Others are likely getting whacked with big increases in insurance rates tied to the active 2004 and 2005 hurricane seasons."

When you add surging property taxes to this dangerous mix, Larson said, "the hardest-luck cases can even be forced out of their homes."'

Okay, this is now - what about the future?

'"The foreclosure train has left the station and is slowly picking up speed," said Jack McCabe, owner of McCabe Research and Consulting in Deerfield Beach. "Expect foreclosures to multiply in 2007 and 2008."

Besides plunging property values that hinder resale and rentals, so-called "creative financing" is a major reason the foreclosure wolf is now knocking on so many doors.

Adjustable-rate mortgages and interest-only loans have taken off since 2004. Indeed, they were the only way more than half of all local buyers could afford to buy a home, McCabe said.

These loans are scheduled for their first adjustments in the next two years, McCabe continued, and many owners will get smacked with 40 percent to 50 percent increases in their monthly payments.'

'Statewide, foreclosures rose 5 percent in November, to 9,362 from 8,872 a year ago.

That's one foreclosure for every 780 households in Florida - a rate that analysts expect will worsen next year.

Larson, the analyst, blames "excess speculation" for driving prices far beyond what fundamental economic forces dictated.

"Now, with prices falling, that irrational exuberance is being wrung out one foreclosure at a time," he said.'

Full Article

Wednesday, December 13, 2006

The Florida Room - Housing News

The latest Housing and Economic News from around the state and around the country.

Please do not hesitate to post any interesting links that you've come across.

Knowledge is Power.

Nuclear Power in Levy County

Rents Increasing Faster than Incomes

Older Americans Have More Debt than Ever

Mortgage Defaults Continue to Climb

Jacksonville - Maybe Not as Big a Bubble

Retail Sales Boom in November

Monday, December 11, 2006

Homeowners Getting Riled About Insurance

From today's Miami Herald:

'Florida homeowners are no longer silent victims of the state's insurance crisis. From the Keys to the Panhandle, they've mobilized.

In Miami-Dade County, they have launched a major petition drive to tell lawmakers in Tallahassee that soaring rates are choking their personal finances and the quality of their lives. In Pembroke Park, mobile-home owners are putting some new ideas on the table. In Brevard and Collier counties, groups of home and business owners have been hard at work crafting their own insurance solutions.

''Next year, I won't have any savings,'' said Zenobia Lopez of Biscayne Gardens, who signed the Miami-Dade petition. ``Where am I supposed to come up with $5,000 again? We need to do something.'''

Wow - sounds like a grass-roots drive. But it isn't.

'Dynamic Public Adjusters Group, a Kendall-area company that helps homeowners try to get higher returns on insurance claims, started the petition in September under the name Floridians in Action. The group is now beginning to put together a board of directors so its work can continue long after the petition has been delivered.

Some of what the petition seeks: rate relief, tougher statewide building codes and a strong lobbying effort for a national catastrophe fund.'

And here's an interesting idea from the owner's of mobile homes. Very interesting.

'Meanwhile, a group of mobile-home owners in Broward County's Pembroke Park isn't shy about putting new ideas on the table, even if some lawmakers sometimes are. They would like to see auto insurers cover mobile homes since they now insure recreational vehicles and boats.

''If the auto insurers would cover the mobile homes, we could alleviate the burden on Citizens Property Insurance,'' said Michael Sousy, Pembroke Park's code enforcement and community liaison officer, who has helped organize the mobile-home owners.

Citizens is the state-run insurer of last resort. But for many homeowners, like folks who own mobile homes, older houses or condos in coastal areas, Citizens is the only insurer. With nearly 1.3 million policies -- nearly half of those in South Florida -- it's the largest insurer in the state.'

Is it sad, pathetic, or just plain wrong that the insurer of "last resort" is paid for by the government (i.e.; you and I) and has become the #1 insurer in Florida? Note: "All of the above" is a qualified answer to that question.

'Residents insured by Citizens are particularly concerned these days because a new state law requires the insurer to boost its reserves rapidly so it has enough money on hand to cover claims from a massive storm. That means big increases over the next three years. The first one is a 55.8 percent hike planned for March.

Last week, Citizens' board of governors decided to table the increase until after the special session. The board is hoping there will be some changes.

So are other groups around the state.

''Our biggest fear is that the proposals that come out of the special session won't be comprehensive enough,'' said Sherri Hudson, a mortgage banker in Brevard County who has helped organize a group of consumers and business owners called Insurance Reform Now.'

I think it's great that everyone is looking for solutions. Unfortunately, somebody has to pay - and I'm still not seeing how we get around that.

'In recent days, Gov.-elect Charlie Crist, Rubio and several other key legislators have said the planned Citizens rate increase is too onerous and the new provision in the insurance bill requiring the increases needs to be modified or possibly scrapped.

Alex Sink, the state's newly elected chief financial officer, and some lawmakers have also said the state needs a stronger consumer advocate to challenge rate increases. Other lawmakers have called for expanding the state grant program for strengthening homes and allowing consumers to increase deductibles.'

Friday, December 08, 2006

More Tools To Help Lower Real Estate Commissions

As we all know, the standard 6% realtor commission has been a 2-edged sword. In a lot of cases (including now, when sales are at rock bottom), Realtors have to work extremely hard to market and sell a house. The buyer's agent? I still haven't been sold on that one.

In most cases, however (especially over the past 3 years, when mortgage lenders were giving away money like Halloween candy and houses were selling in weeks), the difference between the amount of work done and the reward of the 3% commission has been a complete joke.

Now, is getting in on the act. From CNN/Money:

'The Web site, most known for its "Zestimate" price valuations for nearly 70 million homes, launched several new services for home sellers Thursday.

Sellers can now post their home for sale at Zillow - free of charge. Sellers can add details to a page that already includes basic details, such as square footage, number of beds and baths and sales history. '

Sounds good. But wait! There's more!

'And there's something else new - and radical - they can do: "We're encouraging homeowners to post 'Make-me-move' prices," says Zillow's CEO, Rich Barton.

He suggests that owners just toying with the idea of selling can enter an extremely high make-me move price. Then, if they get an offer that blows their socks off, they can make a very profitable sale.'

I like the approach, but these guys obviously haven't paid attention to the market. Unless a house is extra-special (in price, location, or both), it could sit on the database for years. Still, the idea of cutting out the middle-man and saving several thousand dollars is a beautiful thing. And then there's this:

'It's almost the flip side of a service launched this summer by another real estate Web site,

There, buyers are encouraged to make unsolicited offers on any houses they want. Buyers pick out a number of homes, 15 or 20 say (just one or two is too few to work), that they would like to make offers on. They decide just how much to bid on each convey the info to For a fee of $24.95, Reply will deliver a package containing the offers to each of the homeowners.

The company catchword for the service is, "Every home in America is up for sale."

Hmmm...will this drive the total inventory numbers up?

Full Article

Thursday, December 07, 2006

Pavement from Ocala to Sebring, Daytona to St. Pete

New projections from University of Florida's GeoPlan Center for 1000 Friends have come out for Central Florida:

'The state's population will double to 36 million by 2060, and if growth management policies don't change, 7 million of the state's 19.5 million remaining undeveloped acres will go urban.'

Other components of the forecast:

'• Continuous urban development from Ocala on the north to Sebring on the south, and coast to coast from St. Petersburg to Daytona Beach. The corridors of interstates 75 and 4 will be fully developed.

• Full build-out of Pinellas, Hillsborough, Manatee and several other central counties.

• Replacement, or at least fragmentation, of virtually all of the area's natural systems and wildlife habitat corridors.

• The largest percentage of urban land use - 51 percent - of any region in the state. More than a quarter of the region will be transformed to urban status in the next generation.'

What does all this forecast growth mean?

'Unchecked growth presents several threats to the state, according to the study. Crowded schools, traffic congestion, inadequate disaster preparedness and infringement on natural habitat and land that has cultural, environmental or historical significance can deteriorate the quality of life of residents. It could put the brakes on the state's phenomenal job growth, particularly with the "creative class" so highly sought.

"This piece of work is saying, 'We can see the future, and it's not what we hope it will be,'" said Tim Jackson, 1000 Friends' vice president. "Let's rethink this and start by doing a real plan for the long-term future."

Some potential solutions?

'• Expansion of the Florida Forever land acquisition program, to the tune of $1 billion a year from the $300 million now budgeted for conservation.

• New policies on the conversion of rural land to urban use, requiring more preservation, open space and agriculture.

• A 100-year legacy plan, a sort of statewide comprehensive plan laying out what areas are appropriate for development and redevelopment.

• Identification of leaders to organize and advocate for statewide growth management.

Officials from 1000 Friends said they will convene state leaders next year on long-term state planning. The group also is working on a 2060 scenario if projected growth and development patterns follow principles of smart growth.'

But, ney, the DEVELOPERS (and their paid-for lackeys who "represent" us in Tallahassee) have other ideas (that will ensure their pockets are lined for decades to come). Remember! Construction is the #2 industry in Florida. If we don't stop building, we die. Ha!

'The Legislature may not be quick to embrace the recommendations.

An extensive growth management package passed in 2005 now requires concurrency from developers, or pay-as-you-go for infrastructure needs such as roads and schools. The legislation also committed billions of dollars in state money toward road projects and other transportation needs.

And the Florida Forever program - successor to the original Preservation 2000 program - does not expire until 2010.

Lawmakers on Wednesday suggested it might be premature to tinker with growth management policies.

"I commend 1000 Friends of Florida for being visionary and getting out in front and talking about the next program," said state Rep. Stan Mayfield, R-Vero Beach, head of his chamber's Agriculture and Environment Appropriations Committee. "But it's important to take stock and realize where we are in our overall conservation efforts."

Mayfield's compatriot on the Senate side, Republican Dan Webster of Orlando, said he wants to examine the progress of the 2005 legislation before digging in again. "We're not done with what we started," he said. However, "We haven't stopped evaluating what we did. We're not closed to ideas that would say, 'Here's a better way to do it.'"'

So, maybe all this overpriced housing is a good thing? Maybe the "tax thy new neighbor" policy is a good thing? Maybe the insurance crisis is a good thing? Maybe...?

Full Article

Wednesday, December 06, 2006

Permits at a 4-Year Low in Lee County

From the Southwest Florida News-Press, it appears the building boom has slowed significantly.

'The slide in Lee County's home-building industry continued in November as the number of permits for single-family homes fell to levels not seen in almost four years.

Builders in Cape Coral pulled 152 permits, the fewest since 81 in December 2002. In unincorporated Lee County, which includes Bonita Springs and Fort Myers Beach, 357 permits were issued — the fewest since 299 in March 2003, according to figures released Monday.'

Have they (like the rest of Florida)(and the United States) overbuilt?

'They're pretty much in a situation of just waiting because there's so much inventory, and you don't want to add inventory" with almost 14,000 existing homes already on the market, he said.

That situation won't change until the inventory of houses starts to shrink, he said.

"They don't want to add more fuel to the fire," Timmerman said.'

And now a story about a guy who's now going to travel 90 miles to live in an affordable house in Lehigh. 90 miles round trip to Naples?!!! That is so sad.

(note: I once had a 77-mile one way commute for 2 years - it was misery, squared)

'About 77 percent of the single-family home permits were for work in Lehigh Acres, valued at about $63.4 million. That's up from October's 74 percent.

The market has stayed relatively strong in Lehigh Acres because prices there are still the lowest in the county, said John McWilliams, a real estate broker with Coldwell Banker Preferred Properties.

"Lehigh still remains the last bastion of affordability," McWilliams said.

Even in Lehigh, he said, "builders are seeking ways to tweak their home/lot packages below $200,000 because they know that's what has to happen for their building careers to continue."

Jack Bowles, 57, and his wife, Ranae, recently closed a deal with America's First Homes on a three-bedroom, two-bath house in Lehigh for $240,000. They'll move from Naples, where he works at Home Depot and they were renting a house.

Bowles said he probably got twice the home for his money than in Collier County. "In Naples, I wasn't able to buy a home for less than about $300,000 or $350,000," he said. "We spent a whole lot less than that and got a brand new home with a whole lot of amenities."

Now, he said, he has a 90-mile commute but the lower price for his house will more than offset higher gas prices.'

Full Article

Monday, December 04, 2006

Housing Slowdown - Effects on Holiday Spending?

From the Palm Beach Post, some insight on the housing/consumer spending relationship:

'Ask Nancy Bagley about the relationship between the housing slowdown and her net worth, and the Delray Beach homeowner is emphatic.

"Absolutely, I feel less wealthy," says Bagley, who works as a business consultant.

It's a sentiment shared by many homeowners in Palm Beach County and the Treasure Coast as the once-sizzling real estate market cools.

The median price of a single-family home in Palm Beach County fell 12 percent from October 2005 to October 2006, the Florida Association of Realtors said last week, while national home prices dropped a record 3.5 percent for the year. An increasing number of home sellers are getting less than they paid for houses bought last year or earlier this year, according to Palm Beach County property records.'

And for the US...

'As the U.S. economy enters the crucial holiday spending season, retailers and economists are struggling to make sense of how the end of the historic housing boom will affect the annual buying binge.

The consensus: The housing slump won't help holiday spending, but Americans will continue to consume as they always do.

"We should see some effect, but not a big one," says Christopher Carroll, an economist at Johns Hopkins University.

Carroll is one of the few economists to put a number on how changes in home equity affect spending. In a recent study, Carroll and two other economists conclude that for each $1,000 of increase in a home's value, the owner will spend an extra $20 in the short term and $90 over several years.

And as home prices decline, consumers will cut spending by the same amounts. So big drops in housing wealth would "substantially" hurt consumer spending, Carroll says.'

And what about our big retaillers?

'A week into the holiday shopping season, the signals are mixed. Stores were slammed on Thanksgiving weekend, although 5 million fewer Americans braved long lines and crowded parking lots this year than last, according to the National Retail Federation.

Wal-Mart Stores Inc. spooked investors when it reported November sales were worse than expected, and Gap Inc. and Abercrombie & Fitch also reported sales declines for the month. But Target Corp., Costco Wholesale Corp. and Federated Department Stores Inc. all posted healthy sales gains for November.

Mixed signals aside, economists agree that retailers can expect another year of frenzied holiday shopping, although some warn that the housing slowdown will eat into consumers' ability to spend.'

Personally, I continue to wonder how the "concrete-feet" effect of screwed sellers and amateur spec-u-vestors is having on the shopping season. I know of several "For Sale" properties in my area that are owned by persons who really can't afford the carrying costs, and are barely getting by. As such, I will be keeping tabs on the final sales numbers for the 2006 holiday season, because it should be a very good barometer for the 2007 economy.

'But now that home values are slipping, is there a reverse wealth effect that threatens to silence cash registers? Tough to tell, says Bill Hampel, chief economist at the Credit Union National Association.

"We've asked consumers that numerous times, and we don't really get much," Hampel says. "I'm not a big believer that these fringe items (such as the wealth effect) have much of a role in holiday spending."

Yet Hampel says the housing slump means homeowners will have to start saving the old-fashioned way, rather than continuing to spend more than they earn.

"Our houses have been doing our saving for us for most of this decade, and that is ending," he says. "But most people's net worth is so far above what they expected it to be that they don't feel they have to start saving. It's sort of like easy come, easy go."'

Full Article